2002 (10) TMI 208 - AT - Central Excise

Summary

Issues:
1. Disallowance of Modvat credit based on invoices without actual receipt of inputs.
2. Allegations against second stage dealer for issuing invoices without actual sale of goods.
3. Proceedings initiated against the appellant by Revenue.
4. Appeal filed by Revenue before Commissioner (Appeals).
5. Analysis of the case by the Appellate Tribunal CEGAT, Kolkata.
6. Issue of limitation raised by the appellant regarding the show cause notice.

Analysis:

1. The Appellate Tribunal CEGAT, Kolkata dealt with the disallowance of Modvat credit amounting to Rs. 36,383 to the appellants due to availing the credit without receiving the actual inputs, solely based on invoices from the second stage dealer, M/s. Joshi Enterprises. The statements of the proprietor of M/s. Joshi Enterprises revealed the issuance of central excise invoices without any sale of goods, leading to the conclusion that the transactions were merely on paper without the physical movement of goods.

2. The proceedings were initiated against the appellant based on the allegations that the invoices received from M/s. Joshi Enterprises contained vehicle numbers of smaller vehicles like scooters and auto-rickshaws instead of trucks, indicating a lack of actual transactions of input materials. The Joint Commissioner (Adjudication) dropped the proceedings, emphasizing that wrong vehicle numbers should not be the basis for denying Modvat credit.

3. Subsequently, the Revenue filed an appeal before the Commissioner (Appeals), who overturned the decision of the lower authorities, leading to the present appeal before the Appellate Tribunal.

4. During the hearing, it was established that M/s. Joshi Enterprises, as a second stage dealer, had purchased materials from primary dealers at different times, with invoices showing registration numbers of two-wheelers and smaller lorries. The Tribunal noted the consistent pattern of incorrect vehicle numbers on multiple invoices, indicating a systematic lack of actual movement of goods, as corroborated by the statements of the proprietor of M/s. Joshi Enterprises.

5. The issue of limitation was raised by the appellant, citing a delay in issuing the show cause notice beyond six months from taking the credit. However, the Tribunal dismissed this argument, emphasizing that the fraud in issuing invoices without receiving the actual inputs was detected through investigations, distinguishing the case from precedents where the issue was non-payment of duty mentioned in the invoices.

6. Ultimately, the Tribunal rejected the appeal, concluding that there were no merits in the appellant's arguments, especially regarding the disallowance of Modvat credit and the issue of limitation, affirming the decision of the Commissioner (Appeals) to reverse the lower authorities' orders.